Auto Industry Responds to Corruption Accusations

Representatives from Mexico’s automotive industry have strongly denied the accusations of corruption made by President Andrés Manuel López Obrador, who had claimed that several business sectors had bribed the previous administration to pass the Energetic Industry Law (LIE). Discussion continues as a new reform to the energy law is rushed through Congress.

President López Obrador had claimed that the passing of the previous administration’s LIE was the result of bribes coming from private companies, particularly ones from the US looking to manufacture in Mexico at cheaper rates. The corruption accusations were initially made by PEMEX’s former Director Emilio Lozoya but have not yet been proved.

In Feb. 2021, the president modified the law so that CFE’s energy services are primarily used, instead of those of private energy producers. But these modifications were paused by the courts after multiple companies filed for injunctive relief, kickstarting the new battle for a Constitutional Energy Reform.

Industry insiders have strongly denied accusations of bribes. Fausto Cuevas, Director, Mexican Automotive Association (AMIA), stated that the industry does not work with bribes but rather arguments and positions.

Meanwhile, industry representatives are questioning the benefits of the proposed modifications to LIE. Guillermo Rosales, President, AMDA, stated that the reform’s rush to Congress will limit the country’s capacity to produce EVs in the near future for the growing EU, US and Mexican markets.

Others have a more optimistic view. Alberto Bustamante, Director, National Auto Parts Industry, stated that the reform will undergo modifications over the coming days to limit the negative impact it will have on the industry.

The reform has been criticized for its impact on clean energy, as it is estimated to raise carbon emissions by up to 65 percent. Industry insiders also warned that the reform would limit manufacturers’ ability to reduce their carbon emissions. General Motors, the largest vehicle manufacturer in Mexico, claimed that the reform does not align with the company’s global clean energy goals.

“Unfortunately, if the conditions are available, Mexico would not be considered a destination for investment, because the conditions that permit us to meet our objective of having zero emissions in the long term would not be present,” said Francisco Garza, Chief Executive Officer, General Motors. The company recently announced a US$1 million investment in its Ramos Arizpe plant, Coahuila.

President López Obrador’s administration has made the fight against corruption one of its foundations. But some have criticized the administration’s lack of transparency in governmental projects. For example, the Federal Superior Audit Office has found budget irregularities amounting to over MX$100 billion (US$4.97 billion), of which 98.1 percent have not been justified, reports the NGO Mexicans Against Corruption and Impunity (MCCI).